Wednesday, February 8, 2023

Bitcoin Foundation Starts Petition Against Senate Money Laundering Bill

Bitcoin Foundation Starts Petition Against Senate Money Laundering Bill

The Bitcoin Foundation is opposing a U.S. Senate bill that toughens penalties on people who fail to properly report financial transactions. It has launched an online petition and will send letters to members of the Senate Judiciary Committee.

Also read: BTC-e ‘Reopens’ and Promises Withdrawals, but There’s a Catch

Under scrutiny is Bill S.1241 — a.k.a. the “Combating Money Laundering, Terrorist Financing, and Counterfeiting Act of 2017”. Introduced 25th May 2017, it aims in part to crack down further on various activities that anonymize money transmission.

The Bitcoin Foundation claims the law would “criminalize the use of bitcoin under certain circumstances”. Classifying bitcoin and digital currencies as money has seen innocent bitcoin traders thrown in jail, its petition on says.

Bill S.1241 would criminalize a range of less trackable money-transmission or similar activities. These include information networks like hawala, prepaid value-storing cards like gift cards, codes and PIN numbers to access stored value, and digital currencies.

Sen. Grassley: Digital Currencies Potentially Help Fund Terrorism

The Bitcoin Foundation specifically opposes including digital currencies in the bill’s description. It says its main sponsor, Senator Chuck Grassley (R-Iowa) has stated explicitly that be included digital currencies for their potential to fund terrorism.

Claiming there’s no systemic evidence linking terrorist organizations to digital currencies, the Foundation wrote:

“[Digital currencies] have no impact on current or potential criminal activity, it would most certainly stifle technological advances and would in fact over-criminalize any legitimate use of Bitcoin in normal business activities. Therefore, this section should be withdrawn.”

It also called on the Senate Committee to investigate prosecutions of individual bitcoin traders under federal money transmission laws. One such case was Michel Espinoza, a Florida man who sold relatively small amounts of BTC to undercover agents in 2014. A judge finally dismissed his case more than two years later.

But Are Senate’s Concerns Legitimate?

Conversely, it’s not hard to see why the authorities are concerned about digital currencies. Any bearer instrument tradable for monetary value has the potential to be used for nefarious purposes, even if it hasn’t so far.

Chuck Grassley US Senate
Senator Chuck Grassley (R-IA)

However Bill S.1241 includes a clause that details “a strategy to interdict and detect prepaid access devices, digital currencies, or other similar instruments, at border crossings and other ports of entry for the United States”.

It’s currently illegal to carry over $10,000 USD across the border without reporting it. But what constitutes carrying digital currencies? They have no physical form and, even electronically, are not actually “transmitted” or moved. It’s possible to keep one’s entire life savings in a single Bitcoin address and access it with any manner of devices.

Crossing a border with $1 million in a static Bitcoin address is physically no different to not moving it anywhere. The same is true for access and PIN codes, though it’s easier to monitor those at the time of purchase.

Until governments are better able to understand the special characteristics of blockchains and digital currencies, they’re in danger of over-regulating them — or killing innovation through overly-broad laws.

The current Senate bill is just one example. Advocacy groups like the Bitcoin Foundation will need to be vigilant on many fronts.

What’s your opinion on Senate Bill S.1241? Let’s hear your thoughts.

Images via Wikipedia, Wikimedia Commons

Bitsonline Email Newsletter